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Is there such a thing as a reasonable health insurance rate increase?

03-23-2010 by Colleen King

With all the furor over the Anthem Blue Cross rate increase on individual health plans, and rate increases in general, there’s a lot to keep track of for us independent agents. And up until now, I would have sworn it wasn’t possible.

When rate increases on health insurance were coming, used to be you would get a list of who was going to have an increase, when and how much. I would always use this to send letters to my clients to let them know hey, this is coming and when you find out how much it is, let me know if you want to look at other plans. Something has been happening in our industry that keeps me from being as on top of that as I used to be.

Now, instead of getting ‘The List’, many carriers have gone to ‘anniversary’ increases. So every twelve months from when you were first approved, that’s when applicable increases apply. Not in one fell swoop in February like Blue Shield used to do, or March like Anthem. NOW, they have places to go to look for these reports. Or its embedded in your client list. My point, I’m just not as on top of this as I would like to be. I want my clients to know I’m there for them in case they want to look at options.

I apologize to my Aetna clients, but Aetna has gone to this, and the system takes some manipulation to get reports so I’m a little behind. But when I did pull the reports, I was really surprised at what I found. In looking at my 20 clients listed for whatever time period this is, the increases ranged from a low of 0.20% to a high of 11.67%. The 11.67% was on a client over 65, so that really was a minimal increase–relatively speaking.

This was amazing to me, since you always expect something horrendous. Not that anyone wants an increase but these were relatively small. In fact, 10 of my folks were going up less than 1%. Aetna has done something different from the other carriers for a while, and that is basing rates on the older spouse when looking at a couple rather than the younger. Some others are just starting to do that now. When this first came about, the agent community didn’t like it, but between that and a couple other things they do, maybe this is a more realistic pricing model. After all, the 62 year old doesn’t get priced as the dependent on his 29 year old girlfriend.

I would estimate 98% of my clients are in Southern California, predominantly Los Angeles and Ventura counties. Health care costs, ergo insurance prices, tend to be higher in Northern California.

Maybe there’s hope for this industry–it is possible to have minimal rate increases, isn’t it?